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115th Congress   }                                  {   Rept. 115-676
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                  {          Part 2

======================================================================



 
        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2019

                                _______
                                

  May 21, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Thornberry, from the Committee on Armed Services, submitted the 
                               following

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 5515]

      [Including cost estimate of the Congressional Budget Office]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 
5515), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on May 15, 
2018 (H. Rept. 115-676, pt. 1).

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    In compliance with clause 3(c)(3) of rule XIII of the House 
of Representatives, the cost estimate prepared by the 
Congressional Budget Office and submitted pursuant to section 
402 of the Congressional Budget Act of 1974 is as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 18, 2018.
Hon. Mac Thornberry,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5515, the National 
Defense Authorization Act for Fiscal Year 2019.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is David Newman.
            Sincerely,
                                             Mark P. Hadley
                                        (For Keith Hall, Director).
    Enclosure.

H.R. 5515--National Defense Authorization Act for Fiscal Year 2019

    Summary: H.R. 5515 would authorize appropriations totaling 
an estimated $709 billion for the military functions of the 
Department of Defense (DoD), for certain activities of the 
Department of Energy (DOE), and for other purposes. In 
addition, the bill would prescribe personnel strengths for each 
active-duty and selected-reserve component of the U.S. Armed 
Forces. CBO estimates that appropriation of the authorized and 
necessary amounts would result in outlays of $685 billion over 
the 2019-2023 period.
    The bill also contains provisions that would affect the 
costs of defense programs funded through discretionary 
appropriations in 2020 and future years. Those provisions 
mainly would affect force structure, compensation and benefits, 
and various procurement programs. CBO has analyzed the costs of 
a select number of those provisions and estimates that they 
would, on a net basis, increase the cost of those programs 
relative to current law by about $48 billion over the 2020-2023 
period. The net costs of those provisions in 2020 and beyond 
are not included in the total amount of outlays mentioned above 
because funding for those activities would be covered by 
specific authorizations in future years.
    Several provisions of H.R. 5515 would have insignificant 
effects on direct spending and revenues over the 2019-2028 
period. Because enacting the bill would affect direct spending 
and revenues, pay-as-you-go procedures apply.
    CBO estimates that enacting H.R. 5515 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 5515 contains intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that the aggregate cost of the mandates would 
fall below the annual thresholds established in UMRA for 
intergovernmental and private-sector mandates ($80 million and 
$160 million respectively in 2018, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary effects of H.R. 5515 are shown in Table 1. Almost all 
of the $709 billion authorized by the bill would be for 
activities within budget function 050 (national defense).
    Some authorizations, however, fall within other budget 
functions, including $565 million for the Maritime 
Administration in function 400 (transportation); $113 million 
for a medical facility demonstration fund in function 700 
(veterans benefits and services); $64 million for the Armed 
Forces Retirement Home in function 600 (income security); and 
$5 million for the Naval Petroleum Reserves in function 270 
(energy).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
5515 will be enacted near the start of fiscal year 2019 and 
that the authorized and estimated amounts will be appropriated 
each fiscal year.

Spending subject to appropriation

    For 2019, H.R. 5515 would authorize an estimated $709 
billion, nearly all of which would be specifically authorized 
by the bill (see Table 2). Of that amount, $639 billion would, 
if appropriated, count against that year's defense cap set in 
the Budget Control Act (BCA), as amended. Another $69 billion 
specifically authorized for DoD--largely for costs related to 
overseas contingency operations--would not be subject to that 
cap. For nondefense programs, the bill would specifically 
authorize $0.7 billion for several departments and agencies.
    The total amount that would be specifically authorized for 
defense programs is an increase of $15.6 billion (or 2 percent) 
compared to amounts appropriated for 2018. Authorizations for 
three of the four major categories of DoD spending would 
increase: operation and maintenance by $7.6 billion (or 3 
percent), military personnel by $6.3 billion (4 percent), and 
research and development by $3 billion (3 percent). Authorized 
funding for procurement would fall by $1.9 billion (1 percent) 
compared to the current level of funding, while authorizations 
for all other categories combined would increase by $0.6 
billion (2 percent).
    H.R. 5515 also contains provisions that would affect the 
cost of various discretionary programs in future years. Most of 
those provisions would affect end strength (the number of 
military personnel at the end of a fiscal year), military 
compensation and benefits, and authorities related to the 
acquisition of weapons systems. The estimated effects of some 
of those provisions are shown in Table 3 and discussed below. 
The following sections discuss how those provisions would 
affect the need for discretionary appropriations in future 
years.
    Force Structure. The bill would affect the force structure 
of the various military services by setting end-strength levels 
for 2019 and modifying the minimum end-strength levels 
authorized in permanent law.
    Under title IV, the authorized end strengths in 2019 for 
active-duty personnel and personnel in the selected reserves 
would total 1,338,100 and 817,700, respectively. Of the 
selected reservists, 83,062 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would increase by 15,600 and selected-reserve end strength 
would increase by 800 when compared with levels authorized 
under current law for 2019. The specified end-strength levels 
for each component of the armed forces are detailed below with 
CBO's estimate of the effects of those changes on DoD's 
personnel and operation and maintenance costs.
    Active-Duty End Strengths. Compared with end strengths 
authorized under current law for 2019, section 401 would 
authorize increases in active-duty personnel for all four 
services: 7,500 more for the Navy, 4,000 more for the Army, 
4,000 more for the Air Force, and 100 more for the Marine 
Corps. CBO estimates that the net growth in active-duty 
personnel of 15,600 service members would cost $10.6 billion 
over the 2019-2023 period, assuming appropriations are 
increased by that amount.
    Selected-Reserve End Strengths. Sections 411 and 412 would 
authorize the end strengths for reserve components, including 
those who serve on active duty in support of the reserves. 
Under this bill, three of the six reserve components would 
experience increases in end strength: 500 more for the Air 
Guard, 200 more for the Air Force Reserve, and 100 more for the 
Navy Reserve. End strength for the Army Guard, Army Reserve, 
and Marine Corps Reserve would stay the same. As part of those 
changes, the number of full-time reservists who serve on active 
duty in support of the reserves would grow by 4,436 compared 
with current authorized end-strength levels for 2019. CBO 
estimates that, on net, implementing those provisions would 
increase costs for selected reservists by $3.0 billion over the 
2019-2023 period.
    Reserve Technicians End Strengths. Section 413 sets the 
end-strength for dual-status military technicians, who are 
federal civilian personnel required to maintain membership in a 
selected-reserve component as a condition of their employment. 
Section 413 would reduce the number of dual status technicians 
by 166. CBO estimates a decrease in costs for civilian salaries 
and expenses from 166 fewer dual status positions of $85 
million over the 2019-2023 period. (Changing the number of dual 
status technicians would not change the number of part-time 
reservists established in section 411, discussed above. Thus, 
the only budget effects would be the reduction in civilian 
compensation.)
    Compensation and Benefits. H.R. 5515 contains several 
provisions that would affect compensation and benefits for 
uniformed personnel and civilian employees of DoD. The bill 
would specifically authorize regular appropriations of $147.5 
billion for the costs of military pay and allowances in 2019. 
For related costs resulting from overseas contingency 
operations (primarily in Afghanistan), the bill would authorize 
the appropriation of an additional $4.7 billion for 2019.
    Expiring Bonuses and Allowances. Section 611 would extend 
for another year DoD's authority to enter agreements to pay 
certain bonuses and allowances to military personnel. The 
authority to enter into such agreements is currently scheduled 
to expire on December 31, 2018. Some bonuses are paid in lump 
sum, while others are paid in annual or monthly installments 
over a period of obligated service. Based on DoD's budget 
submission for fiscal year 2019, CBO estimates that extending 
that authority for one year would cost $8.0 billion over the 
2019-2023 period.
    Temporary Duty Per Diem Allowance. Section 605 would 
prohibit DoD from reducing per diem rates based on the duration 
of temporary duty assignments for service members and DoD 
civilian employees. The per diem allowance compensates 
travelers for the daily cost of lodging, meals and incidental 
expenses. This section would repeal the per diem policy that 
the Secretary of Defense implemented on November 1, 2014. Under 
that policy, the per diem allowance for travel lasting between 
31 and 180 days is reduced to 75 percent of the full locality 
rate; for trips lasting more than 180 days, the allowance is 
reduced to 55 percent of the full rate. The section also would 
reverse similar per diem policies established by the Services, 
which are specific to travel for contingency operations. 
According to DoD, those two policies have reduced annual 
payments for per diem compensation by about $60 million and $20 
million, respectively. On the basis of that information, CBO 
estimates that implementing section 605 would cost $400 million 
over the 2019-2023 period.
    TRICARE Advantage Demonstration. Section 701 would require 
DoD and the Department of Health and Human Services to carry 
out a demonstration program under which beneficiaries eligible 
for TRICARE-for-Life (TFL) would be enrolled in Medicare 
Advantage (MA) plans.\1\ MA plans typically use managed care 
and preferred provider organizations to reduce medical 
spending. The MA organizations chosen to participate in the 
program would be paid a capitation rate--a fixed pre-negotiated 
fee per enrollee. Beneficiaries who live in selected regions 
would automatically be enrolled in the program although they 
would be given the opportunity to opt out. The demonstration 
program would last for at least two years and could continue 
indefinitely.
---------------------------------------------------------------------------
    \1\TRICARE-for-Life is a benefit available to all military retirees 
and their dependents who are eligible for Medicare. Under TRICARE-for-
Life, Medicare is the first payer for most health costs incurred by the 
beneficiary, and TRICARE acts as wrap-around coverage, paying almost 
all of the remaining costs. The only condition for receiving this 
benefit is that eligible beneficiaries must enroll in Medicare Part B.
---------------------------------------------------------------------------
    The costs to DoD of administering the demonstration program 
would be paid from funds appropriated to the Defense Health 
Program. Based on the cost of previous demonstration programs, 
including the TRICARE Senior Prime demonstration, CBO estimates 
the cost to DoD of administering this program would be about 
$10 million each year.\2\ That includes the cost of contractor 
support, analytical studies, and outreach to affected 
beneficiaries. Costs would be less in the first year because of 
the time needed for rule-making and contract negotiations among 
the various parties. Based on the timeline of the previous 
TRICARE Senior Prime demonstration, CBO would expect the 
demonstration sites to be up and running by the start of 2021. 
CBO estimates that administrative costs would be lower 
beginning in 2023 because there is a significant possibility 
DoD would not continue the demonstration past the initial two-
year period required by section 701. In total, CBO estimates 
this demonstration program would incur administrative costs of 
about $40 million over the 2019-2023 period.
---------------------------------------------------------------------------
    \2\TRICARE Senior Prime was a demonstration program created by the 
Balanced Budget Act of 1997 (Public Law 105-33) that allowed Medicare-
eligible military retirees and their dependents to choose to forgo 
their regular Medicare benefit and participate in a health plan 
administered by DoD and centered around military treatment facilities. 
The demonstration was active from approximately 1998 until 2001, when 
it was replaced by the TRICARE-for-Life benefit.
---------------------------------------------------------------------------
    This demonstration program also would affect direct 
spending from the DoD Medicare-Eligible Retiree Health Care 
Fund and the Medicare Trust Funds, which provide the funding 
for the health expenses of TFL beneficiaries. The potential 
costs or savings of the demonstration are difficult to 
estimate, because many details of the program would be 
determined as part of the agreements between DoD and the 
Department of Health and Human Services and the MA bidding 
process. On one hand, TFL beneficiaries currently have little 
or no out-of-pocket costs after they pay their Medicare Part B 
premiums, and there is some evidence that they use more health 
services than other Medicare populations.\3\ Thus, an 
introduction of managed care or other means to encourage more 
efficient use of health services could result in savings. On 
the other hand, calculating an appropriate per capita premium 
for TFL beneficiaries would be difficult and could lead to the 
government paying more to the MA organizations than the current 
cost of benefits under Medicare and TFL. Also, because TFL 
beneficiaries have little or no out-of-pocket costs, they would 
probably have to be offered incentives to remain in the 
demonstration plan which would likely offer more limited 
provider networks than TFL. After examining several possible 
scenarios and recent reports that compare the cost of MA and 
the Medicare fee-for-service benefit, CBO estimates that there 
is an equal probability that this demonstration program would 
increase or decrease mandatory spending relative to what the 
government currently pays for beneficiaries who use TFL.\4\ The 
effects of this program on mandatory spending could be 
significant; however, because we don't know the direction, 
CBO's estimate of the net effect on spending would on balance 
be zero, the middle of the range of possible outcomes.
---------------------------------------------------------------------------
    \3\For instance, see Department of Defense, Evaluation of the 
TRICARE Program: Fiscal Year 2018 Report to Congress (April 2018), p. 
183, https://health.mil/Military-Health-Topics/Access-Cost-Quality-and-
Safety/Health-Care-Program-Evaluation/Annual-Evaluation-of-the-TRICARE-
Program.
    \4\For instance, see Scott Harrison, Carlos Zarabozo, and Andrew 
Johnson, ``Medicare Advantage program: Status report'' (presentation to 
the Medicare Payment Advisory Commission, Washington, D.C., December 8, 
2017), http://www.medpac,gov/docs/default-source/default-sourece/
default-document-library/madec_dec-2017-public.pdf?sfvrsn=0.
---------------------------------------------------------------------------
    Section 701 could also change the amount of the 
discretionary accrual payments made to the Medicare-Eligible 
Retiree Health Care Fund (MERHCF), which is the mandatory 
account that pays for the TFL benefit. While spending from the 
MERHCF is mandatory, the fund is credited with annual accrual 
payments that are part of DoD's budget and count against the 
caps on discretionary budget authority set by the BCA. Those 
accrual payments, made at the beginning of each fiscal year, 
represent DoD's future costs of providing health care for 
members currently serving in the military once they retire and 
are eligible for Medicare. Total federal spending for military 
retirees who are eligible for Medicare is currently split 
between the MERHCF and the Medicare Trust Funds. However, under 
section 701, it is not clear which source of funds would be 
used to pay the premiums to the MA plans selected for the 
demonstration. If the demonstration continues past the initial 
two-year requirement, the DoD Board of Actuaries could decide 
to change the calculation of the accrual payments to reflect 
any revised source of funding for the affected population. Any 
such revisions could change the accrual contributions by 
hundreds of millions of dollars per year.
    Other Provisions. Several other provisions also would 
affect spending subject to appropriation, primarily by making 
changes to DoD procurement programs.
    Multiyear Procurement Contracts. The bill would authorize 
DoD to enter into multiyear procurement contracts (MYP) for six 
weapons systems. Multiyear procurement is a special contracting 
method authorized in current law that permits the government to 
enter into contracts covering acquisitions for more than one 
year but not more than five years, even though the total funds 
required for all years are not appropriated at the time the 
contracts are awarded. Contracts that would cost more than $500 
million must be specifically authorized in law.
     Section 124 would authorize the Navy to enter into 
one or more multiyear contracts to build up to five amphibious 
vessels. The Navy had planned to start building the lead ship 
of the next generation LPD-17 amphibious ships in 2020. 
However, the Congress provided $1.8 billion in the Consolidated 
Appropriations Act for Fiscal Year 2018 (Public Law 115-141) to 
start building that lead ship in 2018 (designated LPD-30). This 
bill would authorize the appropriation of $150 million in 2019 
for the purpose of building up to five ships over the next five 
years. Based on information provided by the Navy, CBO expects 
that, under this provision, the Navy would build the LPD-31 in 
2020 and the LPD-32 and LPD-33 in 2022 and 2023, respectively. 
Those three ships would cost a total of $6 billion over the 
2019-2023 period, averaging about $2 billion for each ship. 
Because the Navy did not request the MYP contract authority for 
2019, it has not estimated savings that could arise from using 
that authority to purchase the amphibious ships.
     Section 145 would authorize the Air Force to enter 
a multiyear contract beginning in fiscal year 2019 to purchase 
several variants of the C-130J aircraft for the Air Force and 
the Marine Corps. The C-130J is a medium-sized transport 
aircraft that performs a broad variety of airlift and support 
missions. CBO estimates that under such a contract, the Air 
Force would buy 29 aircraft for its squadrons and 23 aircraft 
for the Marines over the 2019-2023 period at a cost of $4.5 
billion. The services estimate that a single multiyear contract 
would cost $580 million less than five annual contracts.
     Section 127 would authorize the Navy to enter a 
multiyear contract to purchase F/A-18E/F aircraft beginning in 
fiscal year 2019. The F/A-18E/F can combat enemy aircraft and 
strike targets on the ground. On the basis of information from 
the Navy, CBO estimates that under such a contract the service 
would buy 72 of those aircraft over the 2019-2021 period at a 
cost of $3.7 billion. The service estimates that a single 
multiyear contract would cost about $380 million less than five 
annual contracts.
     Section 126 would authorize the Navy to enter a 
multiyear contract beginning in fiscal year 2019 to purchase E-
2D aircraft. The E2-D provides surveillance radar coverage for 
naval vessels and aircraft and can operate from aircraft 
carriers. On the basis of information from the Navy, CBO 
estimates that under such a contract the service would buy 24 
of those aircraft over the 2019-2023 period at a cost of $3.5 
billion. The service estimates that a single multiyear contract 
would cost about $336 million less than five annual contracts.
     Section 125 would authorize the Navy to enter into 
one or more multiyear contracts for the procurement of Standard 
Missile-6 interceptors starting in fiscal year 2019 at a rate 
of not more than 125 missiles a year. The bill would authorize 
$490 million in 2019 to purchase 125 missiles and $126 million 
for buying long-lead items associated with missiles purchased 
in later years. On the basis of information from the Navy, CBO 
estimates that the Navy would use the multiyear contract 
authority to purchase a total of 625 missiles over the 2019-
2023 period. CBO estimates that those 625 missiles would 
require appropriations of about $2.4 billion over the 2019-2023 
period, or about $4 million for each missile. The Navy 
estimates that purchasing those interceptors under multiple 
annual contracts would cost about $300 million more than a 
multiyear procurement contract, an increase of about 12 
percent.
     Section 1667 would authorize the Missile Defense 
Agency (MDA) to enter into one or more multiyear contracts for 
the procurement of Standard Missile-3 missiles starting in 
fiscal year 2019. In addition, the bill would authorize $115 
million in 2019 to purchase long-lead items associated with the 
missiles. On the basis of information from DoD, CBO estimates 
that the MDA would use the multiyear contract authority to 
purchase 204 additional missiles. CBO estimates that those 204 
missiles would require appropriations of about $2 billion over 
the 2019-2023 period, or about $10 million for each missile. 
MDA estimates that purchasing those interceptors under multiple 
annual contracts would cost about $200 million more than a 
multiyear procurement contract, an increase of about 10 
percent.
    Virginia-class Submarines. The Navy plans to buy two 
Virginia-class submarines each year over the 2019-2023 period, 
for a total of 10 submarines, using the multiyear procurement 
authority provided in the National Defense Authorization Act 
for Fiscal Year 2018 (Public Law 115-91). That act authorized 
the purchase of up to 13 submarines over that period. Under a 
MYP contract, the Navy is permitted to accelerate the purchase 
of key components of the ships to be bought under the contract. 
Buying key components in this manner under the MYP contract is 
called an economic order quantity (EOQ) purchase. The Navy 
plans to initiate an EOQ contract in 2019 to buy key components 
for 10 submarines.
    Section 130 would require the Navy to use that 2019 EOQ 
contract to purchase equipment for no fewer than 12 Virginia-
class submarines, and would authorize $1 billion in 2019 to buy 
equipment for the two additional submarines. In addition to the 
equipment for those submarines, CBO expects that the Navy would 
complete the purchase of those two additional submarines in 
2022 and 2023. Buying the additional two submarines and the key 
components would increase the total cost for buying Virginia-
class submarines by $6.8 billion over the 2019-2023 period.
    Incrementally Fund the CVN-81 Aircraft Carrier. Section 122 
would allow the Navy to enter into a contract beginning in 
fiscal year 2019 to build the CVN-81 Ford-class aircraft 
carrier, the fourth ship in a new class of carriers that will 
replace the existing 10 Nimitz-class carriers. The bill would 
allow the Navy to use incremental funding for construction of 
the CVN-81. Currently, the Navy plans to buy the CVN-81 in 2023 
and request advance procurement funding in 2021 and 2022 to buy 
materials such as the nuclear reactors and other critical 
items. CBO expects that the Navy would build the CVN-81 
starting in 2023 using the advance procurement and incremental 
funding authority provided in this bill, and that funding for 
the ship would total about $4.5 billion over the 2021-2023 
period. The Navy estimates that the CVN-81 would, in total, 
cost about $15 billion. The remaining cost of $10.5 billion 
would occur after 2023.
    Payments to Military Privatized Housing Initiative Lessors. 
Beginning one month after the date of enactment, section 604 
would require DoD to make monthly payments to lessors of 
housing constructed under the Military Housing Privatization 
Initiative (MHPI). Under MHPI, the department leases land and 
conveys housing units to housing developers who renovate, 
construct and operate the property for lease by military 
families. The developers collect monthly rental payments from 
service members, which the military departments limit to no 
more than the amount of the occupants' housing allowance. The 
National Defense Authorization Act for Fiscal Year 2016 (Public 
Law 114-92) authorized DoD to reduce housing allowances by up 
to 5 percent.
    Payments from DoD to MHPI lessors would equal 5 percent of 
the average cost of specific types of housing in the areas 
around MHPI projects, and would vary based on the rank and 
dependency-status of the service members who would live in 
those MHPI units. The payments would make up for the loss of 
rental income resulting from the recent reduction in housing 
allowances. On the basis of information from DoD, CBO estimates 
that making those payments to MHPI lessors would cost $2 
billion over the 2019-2023 period.
    Overhaul and Repair of Naval Vessels in Foreign Shipyards. 
Section 322 would require all vessels that are part of the U.S. 
naval fleet to be treated as though they are assigned to home 
ports in the United States or Guam for purposes of maintenance 
and repair. Vessels with a home port in the United States may 
not be overhauled, repaired, or maintained in shipyards outside 
the United States or Guam, other than in the case of voyage 
repairs. Military Sealift Command (MSC) vessels often have 
overseas home ports. Thus, they are usually exempt from the 
restrictions on maintenance and repair work in foreign 
shipyards. In addition, the Navy has a few ships stationed in 
Bahrain, the Western Pacific, Japan, Italy, and Spain that are 
also exempt from those restrictions.
    The Navy reports that about 30 ships would be affected by 
this provision, and that each year about 13 of those ships 
would be required to transit to the west coast of the United 
States for shipyard repairs that are currently performed in 
Singapore. (Guam, while closer than the west coast, does not 
have the dry dock capacity for those repairs.) On the basis of 
detailed information from the Navy regarding costs of 
overhauls, and the time and fuel required for those ships to 
transit to domestic shipyards, CBO estimates that round trip 
fuel costs would be about $40 million a year and that higher 
repair costs in the United States would cost an additional $40 
million a year. On that basis, CBO estimates that implementing 
section 322 would cost $400 million over the 2019-2023 period.
    In addition, enacting this provision would reduce the 
operational status of the MSC ships. The Navy has indicated 
that the increased transit time for each ship would amount to 
26 days each way and that there are not sufficient ships in 
their inventory to make up for the lost operational days. While 
buying and operating several additional ships could close that 
gap, the bill does not specifically authorize such purchases; 
thus, CBO ascribes no additional cost for lost operational 
time.
    Indo-Pacific Maritime Security Initiative. Under the 
Southeast Asia Maritime Security Initiative, which is scheduled 
to expire September 30, 2020, DoD provides assistance to 
certain regional partners and allied countries in Southeast 
Asia with the goal of enhancing their ability to respond to 
shared transnational threats. Assistance authorized under the 
program includes the provision of equipment, supplies and 
defense services, training, and small-scale construction. The 
Congress appropriated $65 million in 2018 and DoD has requested 
almost $100 million for that purpose in 2019. Section 1254 
would extend that program through September 30, 2023, and 
rename it as the Indo-Pacific Maritime Security Initiative. The 
section also would specifically add India to the list of 
countries eligible to receive assistance from DoD to cover 
certain training expenses for increasing awareness of 
activities and potential threats in the region, and it would 
allow DoD to add other countries to that list. On the basis of 
information from DoD, CBO estimates that extending and 
expanding this authority would cost about $300 million over the 
2021-2023 period.
    United States Space Command. Section 1601 would establish 
the United States Space Command as a unified subordinate 
command under the U.S. Strategic Command (USSTRATCOM). In 2017, 
DoD created the Joint Force Space Component (JFSC) located at 
Vandenberg Air Force Base in California to carry out joint 
space warfighting operations. The component is scheduled to 
move to Schriever Air Force Base in Colorado this year, where 
it will be co-located with the 50th Space Wing and a research 
center dedicated to space activities.
    DoD reports that JFSC, with a staff of about 150 people, 
has been operating as a unified subordinate command under the 
combatant command of USSTRATCOM and, as such, is already part 
of USSTRATCOM's command structure. On the basis of that 
information from DoD, CBO expects that, under section 1601, 
JFSC would be renamed as the U.S. Space Command, but would 
otherwise operate as under current law. Thus, CBO estimates 
that implementing this provision would have no significant 
budgetary effect.
    Eliminating Certain DoD Organizations. Section 913 would 
require DoD to eliminate the following subordinate 
organizations by January 1, 2021:
           Defense Information Systems Agency,
           Defense Technology Security Administration,
           Defense Human Resources Activity,
           Defense Technical Information Center,
           Office of Economic Adjustment,
           Test Resource Management Center, and
           Washington Headquarters Service.
    Essential functions and assets of those organizations would 
be transferred to other components of the department. CBO 
expects that military personnel assigned to those agencies 
would be transferred to other positions in DoD.
    The affected organizations employ about 7,000 civilian 
personnel and roughly an equivalent number of contract workers. 
Spending subject to appropriation could decline if eliminating 
those organizations reduces the number of civilian employees 
and contractors at DoD. Those potential savings would be offset 
in the near term if the department incurs costs for physically 
relocating agency assets and personnel and for providing 
separation pay to some employees whose positions would be 
eliminated. However, CBO has no basis for estimating how many 
positions could be eliminated and how many would be transferred 
to other defense agencies and offices.

Direct spending and revenues

    Several provisions in H.R. 5515 would have insignificant 
effects on direct spending or revenues, generally because very 
few people would be affected or because the proposal would 
allow the spending of new receipts so that the net effect would 
be small.
     Section 146 would eliminate a 30-day waiting 
period on the obligation of funds for the ECH-130 Compass Call 
program which would slightly accelerate outlays of amounts 
appropriated for 2018.
     Sections 523, 1076, 1213, 1221, and 1222 would 
extend or add to DoD's authority to accept and spend 
contributions from nonfederal entities for various purposes. 
Because the department might not spend all the contributions it 
receives, those sections could reduce direct spending.
     Sections 532 and 534 would establish domestic 
violence as a specified offense under the military justice 
system and modify the Military Rules of Evidence, respectively. 
Additional penalties collected as a result of those provisions 
would be classified as revenues.
     Section 551 would permanently authorize an 
expiring pilot program that allows service members to take a 
one-time career intermission (or sabbatical) from active 
service. During a sabbatical, a service member serves in the 
inactive reserve, and does not count against the authorized end 
strength for active-duty personnel. Unlike most members of the 
inactive reserve, a member on a sabbatical retains eligibility 
for disability retirement. Consequently, section 531 could 
result in a small number of additional service members 
receiving disability retirement if they suffer a qualifying 
disability during a sabbatical.
     Section 621 would allow certain spouses to retain 
eligibility to shop at commissary stores, thus increasing the 
patron base for those stores and likely the number of credit 
and debit card transactions processed. Those processing costs 
are borne by the Department of the Treasury on behalf of 
commissary stores and are paid from a permanent, indefinite 
appropriation.
     Section 701 would require DoD and the Department 
of Health and Human Services to carry out a demonstration 
program under which beneficiaries eligible for TRICARE-for-Life 
would be enrolled in Medicare Advantage plans. CBO estimates 
that there is an equal probability that this demonstration 
program would either increase or decrease mandatory spending. 
Therefore, CBO estimates the net effect would be zero, which is 
the middle of the range of possible outcomes. (For additional 
information, see the discussion of the TRICARE Advantage 
Demonstration in the Spending Subject to Appropriation section 
of this estimate.)
     Section 874 would modify provisions of law that 
control the possession and transfer of certain firearms, and 
thus could increase or decrease the amount of criminal fines 
the federal government might collect under those laws. Criminal 
fines are recorded as revenues, deposited in the Crime Victims 
Fund, and later spent.
     Section 1043 would delay by nine months (from 
January 2020 to October 2020) the time when H-2B nonimmigrant 
(or temporary) workers hired in Guam or the Northern Marianas 
begin to count against the nationwide cap on H-2B workers. 
Under section 1043, beginning in October 2020, H-2B workers who 
previously worked in those territories also would not count 
against the nationwide cap the first time they returned to 
those territories in H-2B. Thus, the provision would result in 
more aliens receiving H-2B status and working in one of the 50 
states or Washington, D.C., where they can receive emergency 
Medicaid benefits and health-insurance subsidies under the 
Affordable Care Act, if they otherwise qualify.
     Section 1079 would give states more time to spend 
federal grants for the construction and operation of public 
target ranges. That extension would change the timing of 
outlays from currently available appropriations.
     Section 1106 would reauthorize, through December 
31, 2020, telework programs for federal workers that expired on 
December 9, 2017. Payments under those programs by agencies 
that are not funded through annual appropriations could affect 
direct spending.
     Section 1236 would increase the number of people 
who would be subject to civil or criminal penalties for 
violating sanctions. Penalties are recorded as revenues, and a 
portion of those penalties can be spent without further 
appropriation.
     Section 1252 would require the President to 
develop a whole-of-government strategy to address activities of 
the People's Republic of China. Developing that strategy would 
increase the administrative expenses for agencies not funded 
through annual appropriations.
     Section 2823 would authorize the Department of the 
Navy to sell a 40-acre parcel of the property that formerly 
served as a department-run dairy farm for the U.S. Naval 
Academy. The sales receipts would be available for expenditure 
without further appropriation; thus the effects on direct 
spending would net to zero.
     Section 3132 would require the Department of 
Energy to impose civil penalties on contractors and suppliers 
for violations of federal law related to nuclear safety and 
radiation protection.
     Section 3523 would allow the Commandant of the 
Coast Guard to levy a civil penalty for actions related to 
certain terminated contracts.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. CBO estimates that the net effects of H.R. 5515 on 
direct spending and revenues would be insignificant.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting H.R. 5515 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2029.
    Mandates: H.R. 5515 contains intergovernmental and private-
sector mandates as defined in UMRA. CBO estimates that the 
aggregate cost of the mandates on public and private entities 
would fall below the annual thresholds established in UMRA for 
intergovernmental and private-sector mandates ($80 million and 
$160 million respectively in 2018, adjusted annually for 
inflation).

Mandate that applies to public and private entities

    Section 401 would increase the costs of complying with 
existing intergovernmental and private-sector mandates by 
increasing the number of service members on active-duty by 
about 16,000 relative to currently authorized levels. Those 
additional service members would be eligible for existing 
protections under the Service Members Civil Relief Act (SCRA). 
Protections under SCRA require public and private entities to 
grant active-duty personnel various allowances for business and 
tax transactions and court procedures.
    For example, SCRA allows service members to maintain a 
single state of residence for paying state and local personal 
income taxes and to request deferrals for certain state and 
local fees. CBO estimates that the additional cost of those 
mandates on state and local governments would be small.
    SCRA also requires creditors to charge no more than 6 
percent interest rate on service members' loan obligations when 
the acquisition of such obligations predates active-duty 
service, and it allows courts to temporarily stay certain civil 
proceedings, such as evictions, foreclosures, and 
repossessions. The Act also precludes the use of a service 
member's personal assets to satisfy the member's trade or 
business liability while he or she is in military service.
    Under the bill, the number of active-duty service members 
covered by SCRA would increase by about 1 percent, CBO 
estimates. Service members' utilization of the various 
provisions of the SCRA depends on a number of uncertain 
factors, including how often and how long they are deployed. 
However, the increase in the number of active-duty service 
members covered by SCRA would be small, so CBO estimates that 
the incremental cost of compliance for public or private 
entities also would be small relative to the annual thresholds 
in UMRA.

Mandates that apply to private entities only

    Section 1083 would impose a mandate on private entities by 
requiring the Federal Communications Commission to issue new 
regulations that would limit the ability of community 
associations to restrict homeowners from installing outdoor 
amateur radio antenna on their property. Homeowner association 
rules, mobile home park agreements, condo association bylaws, 
and deed covenants could be affected by the bill's prohibition. 
The bill also would impose a private-sector mandate on amateur 
radio licensees by requiring them to obtain prior approval from 
their community association before installing an outdoor 
antenna. The cost of the mandates would be any costs associated 
with revising private land-use policies if necessary to comply 
with the bill, and the cost of notifying community associations 
of the intent to install an outdoor antenna. Based on an 
analysis of information about the existing practices of 
community associations, such costs would probably be small. 
Therefore, CBO estimates that the aggregate cost of the 
mandates would fall well below the annual threshold established 
in UMRA for private-sector mandates ($160 million in 2018, 
adjusted annually for inflation).

Mandates that apply to public entities only

    Section 1073 would impose an intergovernmental mandate as 
defined in UMRA. Under the federal Gun Control Act, a person 
may only purchase a firearm in the state in which he or she is 
considered a resident. Exceptions are made for members of the 
military, who are considered residents of states in which they 
are deployed on active duty. The bill would extend this 
exception to military spouses, allowing them to purchase 
firearms in the state where the military member resides or is 
permanently stationed for duty, or in a neighboring state if 
the military member commutes across state borders to his or her 
duty installation. To the extent that any state firearms law or 
regulation conflicts with this change, it would be preempted. 
Although it would limit the application of state laws, CBO 
estimates that it would impose no duty on states that would 
result in additional spending or a loss of revenues.
    Estimate prepared by: Federal Costs: Defense 
Authorizations--Kent Christensen, Military and Civilian 
Personnel--Dawn Regan, Military Construction--David Newman, 
Military Health Care--Matthew Schmit, Military Retirement and 
Immigration--David Rafferty, Operation and Maintenance--William 
Ma, Procurement--Raymond Hall and David Newman, Small Business 
Administration--Stephen Rabent; Mandates: Jon Sperl.
    Estimate reviewed by: Sarah Jennings, Chief, Defense, 
International Affairs, and Veterans' Affairs Cost Estimate 
Unit; Susan Willie, Chief, Public and Private Mandates Unit; 
Leo Lex, Deputy Assistant Director for Budget Analysis.

      TABLE 1--BUDGETARY EFFECTS OF H.R. 5515, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2019a
----------------------------------------------------------------------------------------------------------------
                                                      By fiscal year, in millions of dollars--
                                   -----------------------------------------------------------------------------
                                        2019         2020         2021         2022         2023      2019-2023
----------------------------------------------------------------------------------------------------------------
                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Levels for
 Appropriations Subject to the BCA
 Caps:
    Defense:
        Specified Authorizations
         for the Departments of
         Defense and Energy:
            Authorization Levelb..      638,783            0            0            0            0      638,783
            Estimated Outlays.....      366,827      148,380       59,112       30,328       13,306      617,953
    Nondefense:
        Specified Authorizations
         for Various Departments
         and Agenciesbc
            Authorization Level...          748            0            0            0            0          748
            Estimated Outlays.....          310          172          136          122            0          739
        Estimated Authorizations
         for Various Departments
         and Agencies:d
            Estimated                        10           28            1            1            1           42
             Authorization Level..
            Estimated Outlays.....            6           19           14            1            1           42
            Subtotal:
                Estimated               639,540           28            1            1            1      639,572
                 Authorization
                 Level............
                Estimated Outlays.      367,143      148,571       59,262       30,451       13,307      618,734
Specified Authorizations for
 Defense Appropriations not
 Subject to the BCA Caps:
    Authorization Levelbe.........       69,000            0            0            0            0       69,000
            Estimated Outlays.....       37,770       17,858        7,090        2,850        1,131       66,699
        Total:
            Estimated                   708,540           28            1            1            1      708,572
             Authorization Level..
            Estimated Outlays.....      404,913      166,429       66,352       33,301       14,438      685,433
----------------------------------------------------------------------------------------------------------------
Except as discussed in footnote d below, the authorization levels in this table reflect amounts that would be
  specifically authorized by the bill (as reflected in Table 2). Some provisions in the bill also would affect
  the costs of defense programs in 2020 and future years; estimates for a select number of those provisions are
  shown in Table 3, but are not included above because specified authorizations in future NDAAs would reflect
  funding for those activities.
Numbers may not add to totals because of rounding; BCA = Budget Control Act; NDAA = National Defense
  Authorization Act.
a. In addition to increasing spending subject to appropriation, the bill would have insignificant effects on
  direct spending and revenues over the 2019-2023 and 2019-2028 periods.
b. Amounts that would be specifically authorized by the bill.
c. Authorizations for the Maritime Administration ($565 million), the Department of Veterans Affairs ($113
  million), the Armed Forces Retirement Home ($64 million) and the Naval Petroleum Reserves ($5 million).
d. Various provisions of the bill would increase estimated authorizations for the Small Business Administration
  and several other federal agencies.
e. Primarily for military operations and related activities in Afghanistan, Iraq, and Syria.


                        TABLE 2--SPECIFIED AUTHORIZATIONS OF APPROPRIATIONS IN H.R. 5515
----------------------------------------------------------------------------------------------------------------
                                                      By fiscal year, in millions of dollars--
                                   -----------------------------------------------------------------------------
                                        2019         2020         2021         2022         2023      2019-2023
----------------------------------------------------------------------------------------------------------------
Specified Authorization Levels for
 Appropriations Subject to the BCA
 Caps:
    Defense:
        Military Personnel:
            Authorization Level...      147,525            0            0            0            0      147,525
            Estimated Outlays.....      137,117        8,423          195           41            0      145,776
        Operation and Maintenance:
            Authorization Level...      229,834            0            0            0            0      229,834
            Estimated Outlays.....      145,873       57,582       13,382        4,899        1,829      223,565
        Procurement:
            Authorization Level...      134,561            0            0            0            0      134,561
            Estimated Outlays.....       25,164       40,537       31,902       18,377        8,290      124,270
        Research and Development:
            Authorization Level...       91,971            0            0            0            0       91,971
            Estimated Outlays.....       41,583       32,980        9,218        4,905        2,196       90,882
        Military Construction and
         Family Housing:
            Authorization Level...       10,404            0            0            0            0       10,404
            Estimated Outlays.....          860        2,161        2,938        2,039          994        8,992
        Revolving Funds:
            Authorization Level...        2,359            0            0            0            0        2,359
            Estimated Outlays.....        1,516          505          220           89            9        2,339
        General Transfer
         Authority:
            Authorization Level...            0            0            0            0            0            0
            Estimated Outlays.....          125          -50          -38          -25          -12            0
            Subtotal, Department
             of Defense:
                Authorization           616,654            0            0            0            0      616,654
                 Level............
                Estimated Outlays.      352,238      142,138       57,817       30,325       13,306      595,824
    Atomic Energy Defense
     Activities:
        Authorization Levela......       22,129            0            0            0            0       22,129
        Estimated Outlays.........       14,589        6,242        1,295            3            0       22,129
        Subtotal, Defense:
            Authorization Level...      638,783            0            0            0            0      638,783
            Estimated Outlays.....      366,827      148,380       59,112       30,328       13,306      617,953
    Nondefense:
        Maritime Administration
         and Other Departments and
         Agencies:
            Authorization Levelb..          748            0            0            0            0          748
            Estimated Outlays.....          310          172          136          122            0          739
            Subtotal (subject to
             caps):
                Authorization           639,530            0            0            0            0      639,530
                 Level............
                Estimated Outlays.      367,137      148,552       59,248       30,450       13,306      618,692
Specified Authorization Levels for
 Defense Appropriations not
 Subject to the BCA Caps:c
    Military Personnel:
        Authorization Level.......        4,661            0            0            0            0        4,661
        Estimated Outlays.........        4,297          307            3            1            0        4,608
    Operation and Maintenance:
        Authorization Level.......       51,677            0            0            0            0       51,677
        Estimated Outlays.........       29,983       13,907        4,229        1,423          534       50,076
    Procurement:
        Authorization Level.......       10,458            0            0            0            0       10,458
        Estimated Outlays.........        2,807        3,036        2,499        1,156          474        9,972
    Research and Development:
        Authorization Level.......        1,268            0            0            0            0        1,268
        Estimated Outlays.........          559          488          124           56           24        1,251
    Military Construction:
        Authorization Level.......          921            0            0            0            0          921
        Estimated Outlays.........            0          162          268          237          110          777
    Working Capital Funds:
        Authorization Level.......           15            0            0            0            0           15
        Estimated Outlays.........           11            3            1            0            0           15
    Special Transfer Authority:
        Authorization Level.......            0            0            0            0            0            0
        Estimated Outlays.........          113          -45          -34          -23          -11            0
    Subtotal (not subject to
     caps):
        Authorization Level.......       69,000            0            0            0            0       69,000
        Estimated Outlays.........       37,770       17,858        7,090        2,850        1,131       66,699
            Total Specified
             Authorizations:
                Authorization           708,530            0            0            0            0      708,530
                 Level............
                Estimated Outlays.      404,907      166,410       66,338       33,300       14,437      685,391
----------------------------------------------------------------------------------------------------------------
This table reflects the authorizations of appropriations explicitly stated in the bill in specified amounts.
  Various provisions of the bill also would authorize activities and provide authorities that would affect costs
  in 2020 and in future years. Because the bill would not specifically authorize appropriations to cover those
  costs, they are not reflected in this table. Rather, Table 3 contains the estimated costs of some of those
  provisions.
Numbers may not add up to totals because of rounding; BCA = Budget Control Act.
a. Primarily for atomic energy defense activities of the Department of Energy.
b. Authorizations for the Maritime Administration ($565 million), the Department of Veterans Affairs ($113
  million), the Armed Forces Retirement Home ($64 million), and the Naval Petroleum Reserves ($5 million). The
  authorized amount for the Maritime Administration does not include the $300 million specified in the bill for
  payments to shipping companies under the Maritime Security Program or the $35 million for assistance to small
  shipyards because those amounts are already authorized under current law for 2019.
c. Under H.R. 5515, funding provided for 2019 pursuant to the authorizations in title XV would not be subject to
  the BCA cap on defense appropriations for that year. Most authorizations in title XV would be for costs
  related to Overseas Contingency Operations--primarily military operations and related activities in
  Afghanistan, Iraq, and Syria.


                          TABLE 3--ESTIMATED COSTS FOR SELECTED PROVISIONS IN H.R. 5515
----------------------------------------------------------------------------------------------------------------
                                                                By fiscal year, in millions of dollars
                                                    ------------------------------------------------------------
                                                       2019      2020      2021      2022      2023    2019-2023
----------------------------------------------------------------------------------------------------------------
                                                 FORCE STRUCTURE
 
Active-Duty End Strengths..........................     1,128     2,253     2,335     2,430     2,500     10,646
Selected-Reserve End Strengths.....................       313       644       664       685       709      3,015
Reserve Technicians End Strengths..................        -9       -18       -19       -19       -20        -85
 
                                            COMPENSATION AND BENEFITS
 
Expiring Bonuses and Allowances....................     2,867     2,026     1,404     1,342       364      8,003
Temporary Duty Per Diem Allowance..................        80        80        80        80        80        400
TRICARE Advantage Demonstration....................         5        10        10        10         5         40
 
                                                OTHER PROVISIONS
 
Multiyear Procurement Contracts
    LPD-17 Class Amphibious Ships..................       150     1,800         0     2,000     2,100      6,050
    C-130J Cargo Aircraft..........................     1,027     1,152       762       786       764      4,491
    F/A-18E/F Aircraft.............................     1,241     1,261     1,232         0         0      3,734
    E-2D Aircraft..................................       722       648       586       712       817      3,485
    Standard Missile-6 Missiles....................       616       500       470       450       410      2,446
    Standard Missile-3 Missiles....................       480       430       370       330       380      1,990
Virginia-class Submarines..........................     1,003       740       620     2,200     2,200      6,763
Incrementally Fund the CVN-81 Aircraft Carrier.....         0         0     1,000     1,570     1,920      4,490
Payments to Military Privatized Housing Initiative        370       390       400       420       430      2,010
 Lessors...........................................
Overhaul and Repair of Naval Vessels in Foreign            80        80        80        80        80        400
 Shipyards.........................................
Indo-Pacific Maritime Security Initiative..........         0         0       100       100       100        300
----------------------------------------------------------------------------------------------------------------
Amounts shown in this table for 2019 are included in the amounts that would be specifically authorized to be
  appropriated by the bill (as reflected in Table 2 and summarized in Table 1). Amounts shown in this table for
  2020-2023 would not be specifically authorized by the bill (and therefore are not reflected in Tables 1 and
  2); rather, those amounts would be covered by specified authorizations in future National Defense
  Authorization Acts.
Numbers may not add to totals because of rounding.

                                  [all]